Stepan to close Canadian chemical plant; cuts 30 jobs

9:09 AM, 23rd May 2016

Quinn Stepan Jr, president and CEO of Stepan Company. (File photo)

NORTHFIELD, US: Stepan Company plans to cease all production activities and shutdown its Longford Mills, Canada facility by the end of 2016. This decision will result in a workforce reduction of approximately 30 employees. Stepan products manufactured at this facility will be moved to other production sites within Stepan's existing North American network. The company previously announced the discontinuation of ethoxylation production at the site during the first quarter of 2016.

The total remaining costs associated with the plant shutdown are expected to be $8 million. These costs are expected to be recognised during the final three-quarters of the year as incurred. Approximately one-half of the total expected costs is associated with accelerated depreciation. Other significant cost components relate to severance and plant shutdown expenses, estimated to be $1 million and $3 million, respectively.

Excluding these charges, the company expects to recognise net pre-tax manufacturing savings of less than $1 million in 2016 increasing to $3 million in 2018. These figures reflect preliminary estimates and could change as a result of additional knowledge gathered from executing this decision.

"The decision to close Longford Mills and reduce our workforce was difficult given the skills and commitment of the employees at the site. The plant closure will allow us to improve our asset utilisation in North America and further reduce our fixed cost base. We will work closely with our customers to seamlessly transition our supply chain to other company sites in North America," said Quinn Stepan Jr, president and CEO of Stepan Company.